House prices grew strongly last month, new figures suggest.

The Nationwide building society reported that prices were up 1.6 per cent in February compared with the previous month, taking the average cost of buying a house to £94,965.

Over the last year, prices have risen 14 per cent, the figures also showed.

Despite growing economic uncertainty and rising unemployment, the Nationwide said low interest rates and higher pay levels were boosting activity in the housing market.

Alex Bannister, Nationwide's group economist said a modest fall in the housing market this time last year had been responsible for boosting the annual rate of inflation.

"The market is showing no evidence of a slowdown and house prices may rise more strongly this year than we had anticipated," he added.

"Economic conditions are currently favourable and this has encouraged strong demand for property."

Nationwide added that there was anecdotal evidence of a growing shortage of property in more buoyant areas such as the South West, and East Anglia as rising prices "rippled out" from London.